Teva’s $24 Million Nexium Pay-For-Delay Settlement Is Approved

A Massachusetts federal judge has given tentative approval to a $24 million settlement between Teva Pharmaceutical Industries Ltd. and class action Plaintiffs in a pay-for-delay case over generic versions of AstraZeneca PLC’s heartburn drug Nexium. U.S. District Judge William G. Young, in separate orders, preliminarily approved settlements Teva reached with end-payers and direct purchasers of Nexium. If approved, these would end all claims against the drugmaker.

The Plaintiffs have said AstraZeneca essentially paid off Teva to keep the company from bringing a generic version of the heartburn treatment to market and that Ranbaxy Inc. was part of a broader conspiracy to delay generic entry. According to the settlement agreement, which was first revealed in April, Teva would put $24 million in a fund, where it will be dispersed between the two Plaintiff groups and individual retailers.

The settlement is contingent on a final approval hearing, which was set for Sept. 29. Meanwhile, the judge ordered litigation against Teva brought by end-payers and direct purchasers that was not related to the settlement be put on hold.

The settlement agreed to between Teva and buyers follows a settlement Plaintiffs reached last October with Dr. Reddy’s Laboratories Ltd. Dr. Reddy’s did not pay the Plaintiffs anything and did not admit any wrongdoing, but agreed to offer support at their trial with AstraZeneca and Ranbaxy. At that trial, the first in a pay-for-delay suit since a 2013 U.S. Supreme Court ruling that patent settlements could face antitrust scrutiny, a jury rejected claims that a settlement between AstraZeneca and Ranbaxy harmed competition.

Because it was the first to begin seeking U.S. Food and Drug Administration (FDA) approval for its generic, Ranbaxy and its settlement with AstraZeneca are at the case’s core. The Plaintiffs have since asked the court to allow them to file a submission to advise of developments they say further justify the grant of a new trial in that case.

They have also pushed for an injunction to stop AstraZeneca from following through on its promise not to launch a competing authorized generic version of the drug when or if Ranbaxy enters the market. The injunction would also keep the drugmakers from entering any other such agreements over the next decade. According to motions submitted in connection with the Teva settlement, up to $2 million of the settlement would be put toward costs in the continuing litigation against AstraZeneca and Ranbaxy.

After the various litigation costs and taxes, $1 million of the remaining settlement would go to the indirect purchasers, likely as a cy pres award if they wind up getting nothing from the other defendants. Sixty-one percent of what’s left would go to the direct purchasers and 39 percent is allocated for the individual retailer Plaintiffs. In motions seeking approval of the settlement, lawyers for the Plaintiffs said that they would only get reimbursed for expenses from the settlement and would not receive any attorneys’ fees.